The Local Audit (Health Service Bodies Auditor Panel and Independence) Regulations 2015

Meaning of independent etc.

6.—(1) “Independent”, in relation to membership of an auditor panel, means that the member or prospective member of the panel is not in circumstances, and does not have relationships, which are likely to affect, or could affect his or her judgement in discharging his or her duties as a member of the auditor panel.

(2) The governing board of the health service body must decide whether a prospective member of the auditor panel would qualify as independent if appointed.

(3) In deciding whether a prospective member would qualify as independent, the governing board must consider whether any of the factors described in paragraph (5) apply.

(4) If any of those factors apply, the governing board may decide, in all the circumstances, that the prospective member would not qualify as independent.

(5) The factors referred to in paragraph (3) are whether the person—

(a) has been a member or an employee of the health service body within the period of five years immediately preceding the date of the proposed appointment;

(b) in the case of a CCG, has been, within the period of five years immediately preceding the date of the proposed appointment, an employee or a member of that CCG;

(c) has had, within the period of three years immediately preceding the date of the proposed appointment—

(i) a direct material business relationship with the health service body; or

(ii) an indirect material business relationship as a partner, or senior employee of a body that has such a relationship with the health service body;

(d) has, within the period of three years immediately preceding the date of the proposed appointment—

(i) received additional remuneration from the health service body;

(ii) participated in the health service body’s performance related pay scheme; or

(iii) is a member of the health service body’s pension scheme (other than the NHS pension scheme);

(e) has close family ties with any of the health service body’s advisors, directors, members or senior employees;

(f) holds a cross-directorship or has significant links with other auditor panel members or board members of the health service body through involvement in other companies or bodies;

(g) has previously served on the board of the health service body for a period of more than 9 years beginning with the date of his or her first appointment as a member of the board;

(h) is an appointed representative of the health service body’s medical or dental school provided by a university.

(6) For the purposes of paragraph (5)(c), a material business relationship means what the governing board determines to constitute such a relationship.

(7) For the purposes of paragraph (5)(d)(i), additional remuneration means any remuneration other than that which relates solely to a person’s role as a member of a governing board.

(8) For the purposes of paragraph (5)(f), a person holds a cross-directorship where-

(a) he or she serves as a member of another organisation’s governing board, audit committee or auditor panel; and

(b) at the same time, a member of the governing board at the organisation referred to in sub-paragraph (a) serves as a member of the governing board or the auditor panel of the health service body.